Equitrans Midstream Corporation (NYSE: ETRN) and EQM Midstream
Partners, LP (NYSE: EQM), today, announced financial and
operational results for the third quarter 2019.
Q3 2019 Highlights:
- Generated 94% of transmission operating revenue from firm
reservation fees
- Generated 52% of gathering operating revenue from firm
reservation fees
- Delivered third quarter adjusted EBITDA at high end of Q3
guidance
- Achieved record gathered volume of 8.2 BBtu per day
"Almost one year ago, ETRN emerged as an independent midstream
company with strong fundamentals and today, we remain committed to
becoming the premier infrastructure services provider in North
America," said Thomas F. Karam, chairman and chief executive
officer. "With support from our Boards of Directors, our employees
have worked hard to deliver several milestone accomplishments -
from structure simplification and elimination of the incentive
distribution rights, to the closing of the Eureka/Hornet asset
acquisition, to the standing up of new company policies, programs,
and procedures - all while executing on our in-flight projects. We
have come a long way in a very short time and look forward to an
even brighter future."
"The third quarter results continue to demonstrate our focused
approach to operating in a low commodity price environment," said
Diana M. Charletta, president and chief operating officer. "Our
main priority is to execute on our large growth projects, which are
key to serving the growing demand in the mid-Atlantic and Southeast
regions of the United States. Once placed in-service, these assets
will provide meaningful firm EBITDA contributions to our business
and will open up additional expansion opportunities to further meet
the growing demand."
THIRD QUARTER 2019 RESULTS
ETRN announced net loss attributable to ETRN of $(65.8) million
for the third quarter 2019; and ETRN will receive $136.0 million in
cash from its ownership in EQM. During the quarter, ETRN also
directly incurred $0.3 million of selling, general and
administrative expenses.
For the third quarter 2019, net loss attributable to EQM was
$(10.5) million; adjusted EBITDA was $335.0 million; net cash
provided by operating activities was $234.6 million; and
distributable cash flow was $234.2 million. The Non-GAAP
Disclosures section of this news release provides reconciliations
of non-GAAP financial measures from their most comparable GAAP
financial measure.
ETRN and EQM net loss for the third quarter 2019 was impacted by
a $298.7 million impairment charge to goodwill and net intangible
assets. ETRN also incurred a $6.8 million impairment charge to
deferred taxes related to the goodwill write-down. The impairments
were primarily driven by lower forecast natural gas production
growth behind the Rice Midstream Partners LP (RMP) gathering
assets, which EQM acquired in July 2018, and the Eureka Midstream
Holdings, LLC (Eureka) and Hornet Midstream Holdings, LLC (Hornet)
gathering assets. EQM acquired 60% of Eureka and 100% of Hornet in
April 2019.
For the third quarter 2019, EQM operating revenue increased by
$43.9 million, or 12.0%, compared to the same quarter last year.
The increase in revenue was primarily related to higher contracted
firm gathering capacity and the addition of the Eureka and Hornet
assets. Operating expenses increased by $308.4 million compared to
the third quarter 2018, with $298.7 million related to the
impairment expense. The remaining increase was primarily related to
the addition of the Eureka and Hornet assets, as well as higher
gathering system throughput and additional assets placed
in-service.
EQM's third quarter 2018 results have been retrospectively
recast to include the pre-acquisition results of RMP, which came
under common control in 2017.
QUARTERLY DIVIDEND AND DISTRIBUTION
ETRN
For the third quarter 2019, ETRN will pay a quarterly cash
dividend of $0.45 per share on November 22, 2019 to ETRN
shareholders of record at the close of business on November 13,
2019.
EQM
For the third quarter 2019, EQM will pay a quarterly cash
distribution of $1.16 per common unit on November 13, 2019 to EQM
common unitholders of record at the close of business on November
1, 2019.
EQM expects to maintain a quarterly distribution of $1.16 per
common unit and ETRN expects to maintain a quarterly dividend of
$0.45 per share at least through the in-service date of the
Mountain Valley Pipeline (MVP). Upon completion of MVP, the
distribution and dividend growth rates will be reassessed.
EQM EXPANSION AND ONGOING MAINTENANCE CAPITAL
EXPENDITURES
Expansion
Expansion capital expenditures and capital contributions to
Mountain Valley Pipeline, LLC (MVP JV) were $494 million for the
third quarter 2019 and $1,228 million year-to-date.
$MM
Three Months Ended September
30, 2019
Nine Months Ended September
30, 2019
Full-year 2019
Forecast
Mountain Valley Pipeline
$208
$500
$750
Gathering(1)(2)
$257
$643
$850
Transmission(3)
$16
$54
$70
Water
$13
$31
$45
Total
$494
$1,228
$1,715
(1)
Does not reflect approximately $0.3
million and $58.9 million for the three and nine months ended
September 30, 2019, respectively, related to non-operating assets
acquired by EQM from ETRN that primarily support EQM's gathering
activities (Shared Asset Transaction).
(2)
Includes 60% of Eureka expansion capital
expenditures.
(3)
Includes capital contributions to MVP JV
for the MVP Southgate project.
Ongoing Maintenance
Ongoing maintenance capital expenditures are cash expenditures
made to maintain, over the long-term, EQM operating capacity or
operating income. EQM ongoing maintenance capital expenditures net
of expected reimbursements and excluding the non-controlling
interest share of Eureka were $12.9 million for the third quarter
2019 and $30.4 million year-to-date. EQM forecasts full-year 2019
ongoing maintenance capital expenditures of $55 million, excluding
the non-controlling interest share of Eureka.
OUTLOOK
EQM
The full-year 2019 forecast provided below reflects the
acquisition of 60% of Eureka and 100% of Hornet, which closed on
April 10, 2019. Financial results of Eureka are consolidated in EQM
and ETRN financial statements for accounting purposes.
$MM
2019
Net income attributable to EQM
$650 - $670
Adjusted EBITDA
$1,330 - $1,350
ETRN and EQM intend to provide 2020 capital and financial
guidance in mid-December following approval of the 2020 business
plan from their respective Boards of Directors.
BUSINESS AND PROJECT UPDATES
Mountain Valley Pipeline
The MVP JV is working through the project’s remaining legal and
regulatory challenges and is targeting a late 2020 full in-service
date at an overall project cost of $5.3 - $5.5 billion. On November
4, 2019, Consolidated Edison, Inc. disclosed that it intends to
exercise an option to cap its investment in the MVP project. EQM
expects to fund up to $86 million of the shortfall, which would
increase EQM's ownership in the MVP JV from 45.5% to approximately
47% and would bring EQM's funding portion to approximately $2.7
billion. EQM has funded approximately $1.7 billion through the
third quarter 2019.
MVP Southgate
MVP Southgate is currently in the regulatory review process with
the Federal Energy Regulatory Commission (FERC) and numerous state
and federal agencies. The approximately 70-mile pipeline is
expected to receive gas from MVP in Virginia and transport the gas
to new delivery points in Rockingham and Alamance Counties, North
Carolina. With a total project cost estimate of $450 million to
$500 million, MVP Southgate is backed by a 300 MMcf per day firm
capacity commitment from PSNC Energy and, as designed, the pipeline
has expansion capabilities up to 900 MMcf per day of total
capacity. Subject to the FERC and other regulatory agency
approvals, MVP Southgate is expected to be placed in-service in
2021. EQM has a 47.2% ownership interest in MVP Southgate and will
operate the pipeline.
Hammerhead Pipeline
Hammerhead is a gathering header pipeline that will span
approximately 64 miles from southwestern Pennsylvania to Mobley,
West Virginia, where both MVP and the Ohio Valley Connector
originate. With a total estimated project cost of $555 million, the
pipeline is expected to provide 1.6 Bcf per day of capacity, of
which 1.2 Bcf per day is contracted under a 20-year firm capacity
commitment by EQT Corporation (EQT). Year-to-date 2019, EQM
invested approximately $265 million in Hammerhead and expects to
invest approximately $90 million in the project for the remainder
of 2019. A portion of Hammerhead is expected to be operational by
year-end 2019 and will provide interruptible service until MVP is
placed in-service, at which time the firm capacity commitment will
begin.
Equitrans Expansion Project
A portion of the Equitrans Expansion Project (EEP) commenced
operations with interruptible service in the third quarter 2019.
EEP provides capacity of approximately 600 MMcf per day and offers
access to several markets through interconnects with Texas Eastern
Transmission, Dominion Transmission, and Columbia Gas Transmission.
EEP will also provide delivery into MVP and once MVP is placed
in-service, firm transportation agreements for 550 MMcf per day of
capacity will commence under 20-year terms.
Q3 2019 Earnings Conference Call Information
ETRN and EQM will host a joint conference call with security
analysts today, November 5, 2019, at 9:00 a.m. (ET) to discuss
third quarter 2019 financial results, operating results, and other
business matters. An audio live stream of the call will be
available on the Internet via the Investors page at
www.equitransmidstream.com and www.eqm-midstreampartners.com.
Security analysts may access the call: U.S. tollfree at (866)
393-4306; and internationally at (734) 385-2616. The ETRN/EQM joint
conference ID is 1924428.
Call Replay: For 14 days following the call, an audio
replay will be available at (855) 859-2056 or (404) 537-3406. The
ETRN/EQM conference ID: 1924428.
ETRN and EQM management speak to investors from time-to-time and
the presentation for these discussions, which is updated
periodically, is available via the companies' respective websites
at www.equitransmidstream.com and
www.eqm-midstreampartners.com.
NON-GAAP DISCLOSURES
EQM Adjusted EBITDA and Distributable Cash Flow
As used in this news release, EQM adjusted EBITDA means net
(loss) income plus net interest expense, depreciation, amortization
of intangible assets, impairments of long-lived assets, payments on
EQM's preferred interest in EQT Energy Supply, LLC (Preferred
Interest), non-cash long-term compensation expense and separation
and other transaction costs, less equity income, AFUDC - equity,
adjusted EBITDA attributable to noncontrolling interest and
adjusted EBITDA of assets prior to acquisition. As used in this new
release, run rate annual adjusted EBITDA means EQM's adjusted
EBITDA for the third quarter 2019, annualized for four quarters. As
used in this news release, distributable cash flow means EQM
adjusted EBITDA less net interest expense excluding interest income
on the Preferred Interest, capitalized interest and AFUDC - debt,
ongoing maintenance capital expenditures net of expected
reimbursements, and cash distributions earned by Series A preferred
unitholders. The impact of noncontrolling interests is also
excluded from the calculation of adjustment items to distributable
cash flow. Distributable cash flow should not be viewed as
indicative of the actual amount of cash that EQM has available for
distributions or that EQM plans to distribute and is not intended
to be a liquidity measure. Adjusted EBITDA and distributable cash
flow are non-GAAP supplemental financial measures that management
and external users of ETRN's and EQM’s consolidated financial
statements, such as industry analysts, investors, lenders and
rating agencies, use to assess:
• EQM’s operating performance as compared to other publicly
traded partnerships in the midstream energy industry without regard
to historical cost basis or, in the case of adjusted EBITDA,
financing methods;
• the ability of EQM’s assets to generate sufficient cash flow
to make distributions to EQM unitholders;
• EQM’s ability to incur and service debt and fund capital
expenditures; and
• the viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
ETRN and EQM believe that adjusted EBITDA and distributable cash
flow provide useful information to investors in assessing ETRN's
and EQM’s financial condition and results of operations. Adjusted
EBITDA and distributable cash flow should not be considered as
alternatives to net income, operating income, net cash provided by
operating activities or any other measure of financial performance
or liquidity presented in accordance with GAAP. Adjusted EBITDA and
distributable cash flow have important limitations as analytical
tools because they exclude some, but not all, items that affect net
income, operating income and net cash provided by operating
activities. Additionally, because adjusted EBITDA and distributable
cash flow may be defined differently by other companies in ETRN's
and EQM's industry, ETRN's and EQM’s definitions of adjusted EBITDA
and distributable cash flow may not be comparable to similarly
titled measures of other companies, thereby diminishing the utility
of the measures. The table below reconciles adjusted EBITDA and
distributable cash flow from net income and net cash provided by
operating activities as derived from EQM's statements of
consolidated operations and cash flows to be included in EQM’s
Quarterly Report on Form 10-Q for the three months ended September
30, 2019.
ETRN and EQM are unable to provide a reconciliation of EQM's
projected adjusted EBITDA from projected net income, the most
comparable financial measure calculated in accordance with GAAP,
because EQM does not provide guidance with respect to the
intra-year timing of its or the MVP JV's capital spending, which
impact AFUDC – debt and – equity and equity earnings, among other
items, that are reconciling items between adjusted EBITDA and net
income. The timing of capital expenditures is volatile as it
depends on weather, regulatory approvals, contractor availability,
system performance and various other items. EQM provides ranges for
the full-year 2019 forecasts of net income attributable to EQM and
adjusted EBITDA to allow for the variability in the timing of cash
receipts and disbursements, capital spending and the impact on the
related reconciling items, many of which interplay with one
another. Therefore, the reconciliations of projected adjusted
EBITDA from projected net income are not available without
unreasonable effort.
Reconciliation of EQM Adjusted EBITDA and Distributable Cash
Flow
Three Months Ended September
30,
(Thousands, except coverage ratio)
2019
2018
Net (loss) income
$
(40,215
)
$
209,927
Add:
Net interest expense
53,923
41,005
Depreciation
59,197
43,567
Amortization of intangible assets
14,540
10,387
Impairments of long-lived assets
298,652
—
Preferred Interest payments
2,746
2,746
Non-cash long-term compensation
expense
—
636
Separation and other transaction costs
256
2,161
Less:
Equity income
(44,448
)
(16,087
)
AFUDC – equity
(474
)
(1,448
)
Adjusted EBITDA attributable to
noncontrolling interest (1)
(9,149
)
—
Adjusted EBITDA attributable to RMP prior
to merger (2)
—
(12,825
)
Adjusted EBITDA
$
335,028
$
280,069
Less:
Net interest expense excluding interest
income on the Preferred Interest (3)
(54,544
)
(42,921
)
Capitalized interest and AFUDC –
debt(3)
(7,903
)
(3,202
)
Ongoing maintenance capital expenditures
net of expected reimbursements (3)(6)
(12,876
)
(13,181
)
Series A Preferred Unit distributions
(5)
(25,501
)
—
Distributable cash flow (7)
$
234,204
$
220,765
Distributions declared (4):
Limited Partner
$
232,531
$
134,309
General Partner
—
73,426
Total
$
232,531
$
207,735
Coverage ratio
1.01x
1.06x
Net cash provided by operating
activities
$
234,584
$
242,575
Adjustments:
Capitalized interest and AFUDC –
debt(3)
(7,903
)
(3,202
)
Principal payments received on the
Preferred Interest
1,173
1,109
Ongoing maintenance capital expenditures
net of expected reimbursements (3)(6)
(12,876
)
(13,181
)
Adjusted EBITDA attributable to
noncontrolling interest (1)
(9,149
)
—
Adjusted EBITDA attributable to RMP prior
to merger (2)
—
(12,825
)
Series A Preferred Unit distributions
(5)
(25,501
)
—
Other, including changes in working
capital
53,876
6,289
Distributable cash flow (7)
$
234,204
$
220,765
(1)
Reflects adjusted EBITDA attributable to
noncontrolling interest associated with the third-party ownership
interest in Eureka. Adjusted EBITDA attributable to noncontrolling
interest for the three months ended September 30, 2019 was
calculated as net loss of $29.7 million plus depreciation of $2.6
million, plus amortization of intangible assets of $1.3 million,
plus impairments of long-lived assets of $34.0 million and interest
expense of $1.0 million.
(2)
Adjusted EBITDA attributable to RMP for
the period prior to July 23, 2018 was subtracted as part of EQM's
adjusted EBITDA calculations as these amounts were generated by RMP
prior to acquisition by EQM; therefore, the amounts could not have
been distributed to EQM's unitholders. Adjusted EBITDA attributable
to RMP for the three months ended September 30, 2018 was calculated
as net income of $8.5 million, plus net interest expense of $0.3
million, plus depreciation expense of $3.4 million, and plus
non-cash compensation expense of $0.6 million.
(3)
Does not reflect amounts related to the
non-controlling interest share of Eureka.
(4)
Reflects cash distribution of $1.160 per
common unit for the third quarter of 2019 and 200,457,630 common
units outstanding as of September 30, 2019.
(5)
Reflects cash distribution of $1.0364 per
Series A Preferred Unit for the third quarter of 2019.
(6)
Ongoing maintenance capital expenditures
net of expected reimbursements excludes ongoing maintenance that
EQM expects to be reimbursed or that was reimbursed by ETRN in
2019, or by EQT in 2018, under the terms of the EQT Omnibus
Agreement of $0.2 million and $0.5 million for the three months
ended September 30, 2019 and 2018, respectively. For the three
months ended September 30, 2018, ongoing maintenance capital
expenditures net of expected reimbursements also excluded $1.0
million of ongoing maintenance capital expenditures attributable to
RMP prior to the merger of EQM and RMP.
(7)
EQM believes that calculating
distributable cash flow without deducting separation and other
transaction costs provides investors with greater insight into the
period-to-period ability of EQM’s ongoing assets and operations to
generate cash flow. If separation and other transaction costs were
deducted from the calculation, EQM’s distributable cash flow for
the three months ended September 30, 2019 and 2018 would have
been $233.9 million and $218.6 million, respectively.
Projected Firm Project EBITDA and Water EBITDA
Projected firm project EBITDA means the projected earnings
before interest, taxes, depreciation and amortization of EQM’s firm
capacity gathering and transmission projects, including the
Hammerhead, Equitrans Expansion and other gathering projects, plus
EQM’s proportionate interest of the projected earnings before
interest, taxes, depreciation and amortization of the MVP and MVP
Southgate projects. Projected water EBITDA means the projected
earnings before interest, taxes, depreciation and amortization of
EQM’s water services business. Projected firm project EBITDA and
projected water EBITDA are non-GAAP supplemental financial measures
that management and external users of ETRN’s and EQM’s consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies, use to assess the anticipated impact of EQM’s
in-flight firm capacity projects, both on an aggregate and
project-by-project basis, and EQM’s water services business on
ETRN’s and EQM’s results of operations and financial condition, the
project returns on firm capacity projects and EQM’s ability to
incur and service debt and fund capital expenditures. Firm project
EBITDA and water EBITDA should not be considered as alternatives to
EQM’s net income, operating income or any other measure of
financial performance presented in accordance with GAAP. Firm
project EBITDA and water EBITDA have important limitations as
analytical tools because they exclude some, but not all, items that
affect net income and operating income. Additionally, because firm
project EBITDA and water EBITDA may be defined differently by other
companies in ETRN’s and EQM’s industry, ETRN’s and EQM’s
definitions of firm project EBITDA and water EBITDA may not be
comparable to similarly titled measures of other companies, thereby
diminishing the utility of the measures.
About Equitrans Midstream Corporation:
Equitrans Midstream Corporation (ETRN) has a premier asset
footprint in the Appalachian Basin and is one of the largest
natural gas gatherers in the United States. With a rich 135-year
history in the energy industry, ETRN was launched as a standalone
company in 2018 and, through its subsidiaries, has an operational
focus on gas gathering systems, transmission and storage systems,
and water services assets that support natural gas producers across
the Basin. ETRN is helping to meet America’s growing need for
clean-burning energy, while also providing a rewarding workplace
and enriching the communities where its employees live and work.
ETRN owns the non-economic general partner interest and a majority
ownership of the limited partner interest in EQM.
Visit Equitrans Midstream Corporation at
www.equitransmidstream.com
About EQM Midstream Partners:
EQM Midstream Partners, LP (EQM) is a growth-oriented limited
partnership formed to own, operate, acquire, and develop midstream
assets in the Appalachian Basin. As one of the largest gatherers of
natural gas in the United States, EQM provides midstream services
to producers, utilities, and other customers through its
strategically located natural gas transmission, storage, and
gathering systems, and water services to support energy development
and production in the Marcellus and Utica regions. EQM owns
approximately 950 miles of FERC-regulated interstate pipelines and
also owns and/or operates approximately 1,900 miles of high- and
low-pressure gathering lines.
Visit EQM Midstream Partners, LP at
www.eqm-midstreampartners.com
Cautionary Statements
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended. Statements that do not relate strictly to
historical or current facts are forward-looking. Without limiting
the generality of the foregoing, forward-looking statements
contained in this news release specifically include the
expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of ETRN and its
subsidiaries, including guidance regarding EQM’s and its
subsidiaries’ gathering, transmission and storage and water
services revenue and volume growth; projected revenue (including
from firm reservation fees) and expenses; the weighted average
contract life of gathering, transmission and storage and water
service contracts; infrastructure programs (including the timing,
cost, capacity and sources of funding with respect to gathering,
transmission and storage, and water expansion projects); the cost,
capacity, timing of regulatory approvals, final design and targeted
in-service dates of current projects; the ability of the MVP JV to
satisfy the applicable federal agencies’ land exchange procedures
and consummate the land exchange on a timely basis or at all; the
ultimate terms, partners and structure of the MVP JV, and EQM’s
ownership interests therein; the effects of debt at the MVP JV;
projected shipper reimbursement obligations under MVP-related and
other contracts; expansion projects in EQM’s operating areas and in
areas that would provide access to new markets; EQM’s ability to
provide produced water handling services and realize expansion
opportunities and related capital avoidance; the timing of FERC
approval for, and closing of, EQM's sale of certain assets to
Diversified Gas and Oil Corporation; EQM’s ability to identify and
complete acquisitions and other strategic transactions, including
joint ventures, and effectively integrate transactions (including
Eureka and Hornet) into EQM’s operations, and achieve synergies,
system optionality and accretion associated with transactions,
including through increased scale; EQM’s ability to access
commercial opportunities and new customers for its water services
business; credit rating impacts associated with the MVP, customer
credit ratings and defaults, acquisitions and financings and
changes in ETRN's and EQM's respective credit ratings; expected
cash flows and minimum volume commitments; internal rate of return
(IRR); compound annual growth rate (CAGR); capital commitments;
projected capital contributions and capital and operating
expenditures, including the amount and timing of reimbursable
capital expenditures, capital budget and sources of funds for
capital expenditures; liquidity and financing requirements,
including sources and availability; interest rates; ETRN’s and
EQM’s and their subsidiaries’ respective abilities to service debt
under, and comply with the covenants contained in, their respective
credit agreements; expectations regarding production volumes in
EQM’s areas of operation; the effect and outcome of pending and
future litigation and regulatory proceedings; dividend and
distribution amounts, timing, rates and growth, including the
effect thereon of completion of MVP; effects of the conversion, if
at all, of EQM securities; changes in and the effect of commodity
prices; projected net income, projected adjusted EBITDA, projected
firm project EBITDA, projected water EBITDA and fresh water
deliveries (and the timing thereof), projected distributable cash
flow, projected leverage and projected coverage ratio; projected
SG&A and separation and transaction costs; the timing and
amount of future issuances of securities; impacts of the change of
control of EQT Corporation (EQT); the final contractual terms, if
any, which might result from discussions with EQT or related
financial, operational or other effects of any amendments to
existing agreements with EQT; the effects of government regulation;
the effect of seasonality; and tax status and position. These
forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from projected
results. Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. ETRN
and EQM have based these forward-looking statements on current
expectations and assumptions about future events. While ETRN and
EQM consider these expectations and assumptions to be reasonable,
they are inherently subject to significant business, economic,
competitive, regulatory and other risks and uncertainties, many of
which are difficult to predict and beyond ETRN’s and/or EQM’s
control. The risks and uncertainties that may affect the
operations, performance and results of ETRN’s and EQM’s business
and forward-looking statements include, but are not limited to,
those set forth under (i) Item 1A, "Risk Factors" in ETRN's Annual
Report on Form 10-K for the year ended December 31, 2018 filed with
the SEC, as may be updated by Part II, Item 1A, "Risk Factors," of
ETRN’s subsequent Quarterly Reports on Form 10-Q filed or to be
filed with the SEC, and (ii) Item 1A, "Risk Factors" in EQM's
Annual Report on Form 10-K for the year ended December 31, 2018
filed with the SEC, as may be updated by Part II, Item 1A, "Risk
Factors," of EQM’s subsequent Quarterly Reports on Form 10-Q filed
or to be filed with the SEC. Any forward-looking statement speaks
only as of the date on which such statement is made, and neither
ETRN nor EQM intends to correct or update any forward-looking
statement, unless required by securities laws, whether as a result
of new information, future events or otherwise.
This release serves as qualified notice to nominees under
Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note
that 100% of EQM’s distributions to foreign investors are
attributable to income that is effectively connected with a United
States trade or business. Accordingly, all of EQM’s distributions
to foreign investors are subject to federal income tax withholding
at the highest effective tax rate for individuals or corporations,
as applicable. Nominees, and not EQM, are treated as the
withholding agents responsible for withholding on the distributions
received by them on behalf of foreign investors.
EQUITRANS MIDSTREAM
CORPORATION
STATEMENTS OF CONDENSED
CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended September
30,
2019
2018
(Thousands, except per share
amounts)
Operating revenues (1)
$
408,434
$
364,584
Operating expenses:
Operating and maintenance
43,021
48,092
Selling, general and administrative
24,151
27,380
Separation and other transaction costs
256
16,681
Depreciation
59,460
43,722
Amortization of intangible assets
14,540
10,387
Impairments of long-lived assets
305,459
—
Total operating expenses
446,887
146,262
Operating (loss) income
(38,453
)
218,322
Equity income
44,448
16,087
Other income
70
1,345
Net interest expense
65,606
36,862
Loss (income) before income taxes
(59,541
)
198,892
Income tax expense
1,948
12,926
Net (loss) income
(61,489
)
185,966
Net income attributable to noncontrolling
interests
4,336
103,141
Net (loss) income attributable to ETRN
$
(65,825
)
$
82,825
Earnings per share of common stock
attributable to ETRN (2):
Basic:
Weighted average common stock
outstanding
254,915
254,432
Net (loss) income
$
(0.26
)
$
0.33
Diluted:
Weighted average common stock
outstanding
254,915
255,033
Net (loss) income
$
(0.26
)
$
0.32
(1)
Operating revenues included related party
revenues from EQT Corporation of $275.4 million and $276.9 million
for the three months ended September 30, 2019 and 2018,
respectively.
(2)
For the three months ended September 30,
2018, earnings per share was calculated based on the shares of ETRN
common stock distributed in connection with ETRN's separation from
EQT and is considered pro forma in nature. Prior to its separation
from EQT, ETRN did not have any publicly issued or outstanding
common stock (other than shares owned by EQT).
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
STATEMENTS OF CONSOLIDATED
OPERATIONS (UNAUDITED) (1)
Three Months Ended September
30,
2019
2018
(Thousands, except per unit
amounts)
Operating revenues (2)
$
408,434
$
364,584
Operating expenses:
Operating and maintenance
43,021
48,109
Selling, general and administrative
23,845
26,860
Separation and other transaction costs
256
2,161
Depreciation
59,197
43,567
Amortization of intangibles assets
14,540
10,387
Impairments of long-lived assets
298,652
—
Total operating expenses
439,511
131,084
Operating (loss) income
(31,077
)
233,500
Equity income
44,448
16,087
Other income
337
1,345
Net interest expense
53,923
41,005
Net (loss) income
(40,215
)
209,927
Net (loss) income attributable to
noncontrolling interests
(29,697
)
—
Net (loss) income attributable to EQM
$
(10,518
)
$
209,927
Calculation of limited partner common unit
interest in net (loss) income:
Net (loss) income attributable to EQM
$
(10,518
)
$
209,927
Less: Series A Preferred Units interest in
net income
(25,501
)
—
Less: Pre-acquisition net income allocated
to EQT
—
(8,490
)
Less: General partner interest in net
income – general partner units
—
(2,379
)
Less: General partner interest in net
income – IDRs
—
(70,967
)
Limited partner interest in net (loss)
income
$
(36,019
)
$
128,091
Net (loss) income per limited partner
common unit – basic
$
(0.18
)
$
1.14
Net (loss) income per limited partner
common unit – diluted
$
(0.18
)
$
1.14
Weighted average limited partner common
units outstanding – basic
200,483
111,980
Weighted average limited partner common
units outstanding – diluted
200,483
111,980
(1)
EQM’s consolidated financial statements
for the three months ended September 30, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
(2)
Operating revenues included related party
revenues from EQT Corporation of $275.4 million and $276.9 million
for the three months ended September 30, 2019 and 2018,
respectively.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
GATHERING RESULTS OF
OPERATIONS (1)
Three Months Ended September
30,
2019
2018
FINANCIAL DATA
(Thousands, except per day
amounts)
Firm reservation fee revenues (2)
$
154,791
$
112,598
Volumetric-based fee revenues
144,700
140,263
Total operating revenues
299,491
252,861
Operating expenses:
Operating and maintenance
27,127
18,868
Selling, general and administrative
18,462
18,184
Separation and other transaction costs
256
2,161
Depreciation
38,943
25,359
Amortization of intangible assets
14,540
10,387
Impairments of long-lived assets
298,652
—
Total operating expenses
397,980
74,959
Operating (loss) income
$
(98,489
)
$
177,902
OPERATIONAL DATA
Gathering volumes (BBtu per day):
Firm capacity reservation (2)
3,824
2,114
Volumetric-based services
4,406
4,437
Total gathered volumes
8,230
6,551
Capital expenditures (3)(4)
$
272,138
$
194,477
(1)
EQM’s consolidated financial statements
for the three months ended September 30, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
(2)
Includes revenues and volumes, as
applicable, from contracts with MVCs.
(3)
Capital expenditures for the three months
ended September 30, 2019 include expenditures made to ETRN for the
Shared Asset Transaction of approximately $0.3 million.
(4)
Includes approximately $6.7 million of
capital expenditures related to noncontrolling interests in Eureka
for the three months ended September 30, 2019.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
TRANSMISSION RESULTS OF
OPERATIONS
Three Months Ended September
30,
2019
2018
FINANCIAL DATA
(Thousands, except per day
amounts)
Firm reservation fee revenues
$
81,990
$
82,669
Volumetric-based fee revenues
5,309
6,681
Total operating revenues
87,299
89,350
Operating expenses:
Operating and maintenance
8,976
10,721
Selling, general and administrative
5,286
7,581
Depreciation
13,347
12,357
Total operating expenses
27,609
30,659
Operating income
$
59,690
$
58,691
Equity income
$
44,448
$
16,087
OPERATIONAL DATA
Transmission pipeline throughput (BBtu per
day):
Firm capacity reservation
2,786
2,927
Volumetric-based services
29
104
Total transmission pipeline throughput
2,815
3,031
Average contracted firm transmission
reservation commitments
(BBtu per day)
3,650
3,658
Capital expenditures(1)
$
16,296
$
37,626
(1)
Transmission capital expenditures do not
include capital contributions made to the MVP Joint Venture for the
MVP and MVP Southgate projects of approximately $211.7 million and
$263.2 million for the three months ended September 30, 2019 and
2018, respectively.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
WATER RESULTS OF OPERATIONS
(1)
Three Months Ended September
30,
2019
2018
FINANCIAL DATA
(Thousands)
Water services revenues
$
21,644
$
22,373
Operating expenses:
Operating and maintenance
6,918
18,521
Selling, general and administrative
97
1,094
Depreciation
6,907
5,851
Total operating expenses
13,922
25,466
Operating income (loss)
$
7,722
$
(3,093
)
OPERATIONAL DATA
Water services volumes (MMgal)
523
449
Capital expenditures
$
13,466
$
7,981
(1)
EQM’s consolidated financial statements
for the three months ended September 30, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
CAPITAL EXPENDITURE SUMMARY
(1)
Three Months Ended September
30,
2019
2018
(Thousands)
Expansion capital expenditures (2)(3)
$
288,052
$
226,078
Maintenance capital expenditures
13,570
14,006
Total capital expenditures(4)
$
301,622
$
240,084
(1)
EQM’s consolidated financial statements
for the three months ended September 30, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
(2)
Expansion capital expenditures for the
three months ended September 30, 2019 and 2018 do not include
capital contributions made to the MVP JV of $211.7 million and
$263.2 million, respectively.
(3)
Expansion capital expenditures for the
three months ended September 30, 2019 do not include expenditures
made to ETRN for the Shared Asset Transaction of approximately $0.3
million.
(4)
Includes approximately $6.7 million of
capital expenditures related to noncontrolling interests in Eureka
for the three months ended September 30, 2019.
Source: Equitrans Midstream Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191105005457/en/
Analyst inquiries: Nate Tetlow – Vice President,
Corporate Development and Investor Relations 412-553-5834
ntetlow@equitransmidstream.com
Media inquiries: Natalie Cox – Director, Communications
and Corporate Affairs 412-395-3941 ncox@equitransmidstream.com
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